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Summary:

In an exhaustive story on Google’s troubles monetizing YouTube, The Wall Street Journal discovered that the company is considering a plan to implement the dreaded pre- and post-roll advertisements, something the company has shunned since the beginning. It’s a major reversal for the company. Last year, […]

In an exhaustive story on Google’s troubles monetizing YouTube, The Wall Street Journal discovered that the company is considering a plan to implement the dreaded pre- and post-roll advertisements, something the company has shunned since the beginning.

It’s a major reversal for the company. Last year, when we talked to then-head of YouTube monetization Shashi Seth he said:

“Pre-rolls and post-rolls did not perform well on our platform. [In our testing,] 75 percent of our users were unhappy with them.”

Seth quit earlier this year; perhaps it was a sign of protest over the impending switch to the hated ad format?

Whatever the reason, the company is under the gun to generate significant revenue and the WSJ reports that money from YouTube ads will most likely hit just $200 million this year (looks like Forbes was right). At a recent talk, Chad Hurley said YouTube is also looking to affiliate sales for revenue. But advertisers like the pre-roll format, and in a crunch time like this, the company will go with what works.

  1. Pierre Col – UbicMedia Wednesday, July 9, 2008

    Youtube monetization is a total mess.

  2. A Marketing Sherpa report said that 70% of people abandoned pre roll ads. Youtube backs up those numbers. So why in the world would you move forward with preroll? Anyone can answer that?

  3. @Jim Where were the ads? I’d abandon a two minute news clip because of a 30-second pre-roll, but would probably have no problem sitting through a 7-second ad in front of a two minute clip produced by The Onion.

  4. “75% of our viewers weren’t happy with them”… but 100% of our advertisers were.

  5. YouTube Pre-Rolls? Think Inside the Box « NewTeeVee Wednesday, July 9, 2008

    [...] Pre-Rolls? Think Inside the Box Commenters were quick to condemn YouTube’s plan to add pre-rolls to its videos. With so many people hating on pre-rolls, why [...]

  6. Just 4% of YouTube Videos Come From Partners « NewTeeVee Wednesday, July 9, 2008

    [...] shocking to hear that YouTube would consider something as counter to its philosophy as showing pre-roll ads, which the company itself has acknowledged that its users despise. But I guess that’s what [...]

  7. Gary Bourgeault Wednesday, July 9, 2008

    There’s a couple reasons Google would be willing to include pre- or post rolls. One is they’re trying to gravitate more to people viewing videos on the TV platform, which has socialized people for decades to put up with commercials.

    The second reason, although Google would never admit it, is they’re probably tired of the freeloaders using the site without offering anything back.

    If there isn’t a significant way to monetize the site, pressure will eventually come from shareholders to do it or get rid of the property. U.S. law requires a public company to make decisions based on what’s best for the shareholders, and executives must respond accordingly.

    Assuming they aren’t able to figure out a way to do it, pressure similar to what’s being put on Time Warner concerning AOL is inevitable; especially if the Google stock ends up dropping in another big way.

    As far as the users of YouTube go, putting up pre-rolls would get rid of a lot of the dead weight that sits around always wanting something for nothing.

    That may even be part of the Google strategy in order to cut back on costs.

    One way or the other, Google will have to monetize the site. They’ll just have to be willing to lose some viewers in exchange for that reality.

    Even if they do, it makes no difference. What other online business wants people to add to their costs without a way to make money on them? Eventually the users that leave would come back, because competitors would make a similar move in order to offset costs. It’s called running a business.

  8. Are Pre-rolls Evil? Thursday, July 10, 2008

    [...] it isn’t surprising that NewTeeVee is reporting a stance reversal by YouTube on the idea of running pre-roll advertisements on YouTube videos. But when a pre-roll [...]

  9. Report: User-Gen to Only Ever Account for 4% of Video Revenue « NewTeeVee Thursday, July 10, 2008

    [...] borne out (at least in the present day) by the actions of video sites; for instance, YouTube considering resorting to pre-roll and post-roll advertising to eke more revenue out of its partner videos. The [...]

  10. Exclusive: Video of YouTube on TiVo « NewTeeVee Wednesday, July 16, 2008

    [...] be able to see pre-rolls and overlays. This lends credence to our earlier theory that YouTube is reversing its stand on the hated pre-roll format because as it moves to the TV set, the pre-roll will look just like a [...]

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